High Court case challenges existing 'labour hire arrangement' practice

Federal Court's Chief Justice sides with the worker but says court is ‘bound’ by case law

BY Paulinet Tamaray 14 Jan 2022

This year, the High Court is set to rule on a case that could change the landscape of “labour hire arrangements” as the judgment is expected to decide on the proper test of distinguishing when a worker under it is considered an “employee.”

The case is an appealed Federal Court decision that had ruled an unskilled labourer in a tripartite labour hire arrangement was “a contractor not an employee,” although he was under “the direction, supervision and control” of the third-party business. The decision was met by critics, including Federal Court’s Chief Justice James Allsop, stating that “if they were not bound by previous authority,” they may have ruled that the [worker] was an employee.

In 2016, a worker signed an administrative services agreement with a labour hire company. He was offered work at a third-party’s business, a builder of high-rise residential apartments. The worker accepted the offer, entering a “tripartite or triangular labour hire relationship.”

After two years, the worker with his union filed before the Federal Court, contending that the labour hire company contravened various National Employment Standards and the Fair Work Act by its failure to pay the worker the Building and Construction General On-Site Award 2010.

The court noted that the worker sought awards that applied to an “employee.” Since he did not fulfill the requirements under case law, his application was dismissed.

Before the High Court, the worker now challenges the assessment of “control” in a triangular labour hire arrangement and the role and weight of the fact that he was “not in business on his own account.”

In tripartite labour hire arrangements, a company (third-party business) requiring either skilled or unskilled labour, outsource the provision of their workers to labour hire companies (provider). In such arrangements, there’s usually no contractual arrangement between the worker and the company (third-party business); The worker’s contractual relationship is with the labour hire agency (provider).

In the High Court case, the worker submitted that he was under the third-party business’ “direction, supervision and control.” Thus, he should be considered an employee and entitled to employment benefits.